Buoyed by strong US equities, Norway’s Government Pension Fund Global returned 2.1%, or 174 billion kroner ($20.84 billion), during the third quarter to raise its total market value to 8.478 trillion kroner, or nearly $1.02 trillion, despite falling short of its benchmark index by two-tenths of a percentage point.
The fund’s equity investments returned 3.1%, while investments in unlisted real estate returned 1.9%, and fixed-income investments lost 0.3% during the quarter. The fund is comprised of 67.6% in equity investments, 29.7% in fixed-income investments, and 2.7% in unlisted real estate investments.
The fund noted that US stocks rose during the quarter, supported by continued growth in corporate earnings, but that share prices elsewhere did not perform as well.
“This mixed picture was due partly to expectations for economic growth moving differently,” said the fund in a release. “Uncertainty about the effects of increased trade barriers had a negative impact on growth expectations outside the US.”
North American stocks returned 7.0%, and made up 41.3% of the equity portfolio, with US stocks, which were the fund’s single-largest market at 39.1% of its equity investments, returned 7.3%, or 6.9% in local currency. European shares returned 0.7% and accounted for 34.3% of the fund’s equity investments. UK equities, which make up 9.3% of its equity investments, lost 1.6%, or 0.8% in local currency. Stocks in Asia and Oceania returned 0.4% and made up 22.0% of the fund’s equity investments, with Japanese stocks returning 3.7%, or 5.8% in local currency, and accounting for 9.0% of equity investments.
Emerging markets struggled during the quarter, posting a loss of 2.2% while accounting for 10.3% of the equity portfolio. Chinese equity investments, which represent 3.6% of the fund’s equity investments, declined 7.8% during the quarter.
The fund also said that healthcare stocks were the strongest performers, returning 8.9% due to stronger-than-expected second-quarter earnings, followed by technology stocks, which returned 5.3% thanks to strong growth in cloud solutions and expectations for the launch of new smartphone models.
Meanwhile telecom companies returned 4.7% for the fund, driven by a strong performance from the North American mobile sector, and a growing expectation that US authorities will approve the merger of T-Mobile and Sprint, the third- and fourth-largest mobile carriers in the market. And the utilities sector was the weakest performer for the fund, losing 0.6% due to higher interest rates in the global financial markets contributing negatively to the returns in the sector.
On an individual stock basis, the fund’s investment in tech giant Apple Inc. made “the most positive contribution to the return in the third quarter,” followed by Amazon.com and Microsoft Corp. The worst-performing individual stock investments came from the fund’s holdings in investment holding conglomerate Tencent, social media company Facebook, and pharmaceutical company Bayer.
The fund also participated in 47 initial public offerings in the quarter, the largest of which were at technology company China Tower Corp Ltd, consumer services company Meituan Dianping, and oil and gas company Viva Energy Group.